Talking Climate Risk- Lessons with Glenn McGillivray, Mind your P&C’s Podcast

In a compelling episode of the Insurance Institute of Canada's "Mind Your P&C's" podcast, Glenn McGillivray, Managing Director at the Institute for Catastrophic Loss Reduction and a member of Collectivfide's Board of Directors, shared critical insights into the pressing challenges posed by climate-related disasters. McGillivray's analysis of Canada's experiences with wildfires and floods in 2024 underscores the urgent need for proactive measures to safeguard communities and the insurance industry.

Wildfires: A Growing Concern

The intensity and frequency of wildfires in Canada have been increasing, driven by climate change and human activities. Primary ignition sources, such as lightning strikes and human negligence, can have catastrophic consequences.

One of the most significant factors influencing wildfire damage is the construction materials used in homes and buildings, especially the roof and siding. Wooden structures, as we know, are highly susceptible to fire, and if you have an older home or building, you should ensure that your roof rates a Class A. This can be asphalt shingles, metal, stone, cement, and other Class A material. Using fire-resistant materials like concrete or treated wood can significantly mitigate risks.

Regarding siding, non-combustible siding options like fibre cement, metal, or stucco can provide a critical barrier against heat and flames. Homes with vinyl siding are particularly vulnerable, as the material can melt or ignite when exposed to temperatures that are not too high. Upgrading to fire-resistant siding reduces wildfire risks and improves the structure's overall durability. Your deck and its material is another item to consider since a wood deck is problematic, especially if it's near the back of the house with vegetation underneath.

McGillivray emphasized the need for homeowners, builders, and policymakers to prioritize resilience through better building practices. McGillivray also called for adopting construction codes that mandate fire-resistant materials and creating defensible spaces around properties to reduce fire spread. FireSmart Canada is the premier wildfire mitigation program to help you offset the risk of wildfire to your home.

Flooding: Navigating the Complexities

Flooding, another primary concern for homeowners and the industry, presents a multifaceted challenge. McGillivray distinguished between overland flooding—caused by rivers overflowing their banks—and hybrid events, which involve a combination of rainfall, snowmelt, and other contributing factors. Both types of floods are becoming more frequent and severe due to changing weather patterns.

Accurate flood mapping is vital for identifying high-risk areas. However, many parts of Canada still rely on outdated or incomplete maps, leaving communities unprepared. Investing in updated and detailed flood maps is essential for effective risk management.

These reasons and more are why proactive measures are critical:

• Upgrading infrastructure to withstand extreme weather conditions.

• Implementing bylaws that prevent construction in high-risk zones.

• Educating the public about flood risks and preparation strategies, empowering individuals and communities to take preventive actions.

Mitigation and Resilience

A recurring theme in McGillivray's discussion was the critical role of mitigation in reducing the impact of climate-related disasters. Building codes need to evolve to reflect the realities of a changing climate. For instance, roofs that withstand high winds, reinforced foundations, and improved drainage systems can significantly enhance a structure's resilience.

On a broader scale, McGillivray urged collaboration among governments, insurers, and the private sector. Public investments in resilient infrastructure, such as levees and firebreaks, can reduce the frequency and severity of disasters. Public awareness campaigns can also drive community engagement in mitigation efforts, creating a culture of preparedness and resilience.

Implications for the Insurance Industry

The rising frequency of natural disasters presents profound challenges for Canada's property and casualty (P&C) insurance sector. Insurers are grappling with increasing claims, leading to higher premiums and, in some cases, an unwillingness to underwrite policies in high-risk areas. This trend raises critical questions about the accessibility and affordability of insurance for Canadians.

McGillivray emphasized the importance of adapting insurance models for the evolving risk landscape, like leveraging advanced data analytics to assess risk more accurately and incentivizing policyholders to adopt mitigation measures through premium discounts or other rewards. Collaboration with governments and the construction industry is also essential to promote resilience and reduce losses.

The Path Forward

McGillivray's remarks highlight the urgent need for a coordinated response to the escalating challenges posed by climate change. By investing in resilient infrastructure, updating policies and building codes, and fostering public awareness, Canada can better prepare for future disasters. Thank you, Glenn, for your detailed insights and expertise.

To gain a deeper understanding, listen to the full podcast episode here.